The Search for a Limited-Government Candidate Continues

Newt Gingrich, who continues to vigorously – though unofficially, so he can do it with million-dollar donations – campaign for president, appeared in Washington yesterday at what was billed as a debate with John Kerry on global warming. Some conservatives, disillusioned by the prospect of choosing among Rudy Giuliani, John McCain, and Mitt Romney, have looked to Gingrich as an actually Reaganite candidate. He should have dispelled those thoughts yesterday.

Instead of disagreeing with Kerry, Gingrich said that global warming is a problem and that “we should address it very actively.” He raved about Kerry’s book on the environment. He refused even to disagree with Kerry over the urgency of government action. Perhaps most un-Reaganesquely, he declared that while he preferred tax incentives to government mandates, “I am not automatically saying that coercion and bureaucracy is not an answer.”

There’s a Republican mantra for the new century.

Is Benign Neglect the Best Immigration Policy?

Writing in the Wall Street Journal, a professor from the University of California, San Diego, argues that an expanded guest worker program might be less desirable than the status quo. Given the likelihood that politicians and bureaucrats will sabotage even a good idea with needless regulation and red tape, this is a compelling argument:

…from a purely economic perspective, illegal immigration is arguably preferable to legal immigration. …the illegal route is for the moment vastly more efficient than the cumbersome legal system. Illegal immigration responds to economic signals in ways that legal immigration does not. Illegal migrants tend to arrive in larger numbers when the U.S. economy is booming and move to regions where job growth is strong. Legal immigration, in contrast, is subject to bureaucratic delays, which tend to disassociate legal inflows from U.S. labor-market conditions. The lengthy visa application process requires employers to plan their hiring far in advance. Once here, guest workers cannot easily move between jobs, limiting their benefit to the U.S. economy.

Enemy of the People … ?

Below, Sigrid posts Walter Murphy’s much-blogged about claim that he has been watch-listed because of a speech he gave criticizing Bush’s constitutional record. Those interested in the story should also read the skeptical questions raised by Wired’s Ryan Singel, a Watch List critic, about Murphy’s story, which are available here:

Woe be it for this blog to defend the country’s foolish watchlist system, but after having spent more than four years reporting on watchlists, filing Freedom of Information Act requests, and talking with persons flagged by the lists, I have never seen a single case of a person being put on the list for activities protected by the First Amendment. …

I’m not even certain that in this case Murphy’s name matched or was similar to a name on the list - which is what has snagged nearly every David Nelson in the country and what got Senator Ted Kennedy a dose of handheld wanding.

In this case, I would guess that Murphy was singled out randomly. He himself says he wasn’t flagged on the way back, which he almost certainly would have been if he were on the ‘selectee’ list. (The ‘selectee’ list directs airlines to single out that person for extra screening, while a related list, the ‘no-fly’ list directs airlines to keep a person off a plane.)

I’m open to any evidence that the government has watchlisted American citizens for exercising their Constitutional rights, but I’ve never seen it.

The left wants to believe it is living in some version of Orwell’s 1984. … Around these parts, we prefer to see the world through a Kafka and Gilliam kaleidescope.

French Presidential Candidate Calls for 25 Percent Corporate Tax Rate

It is always easy to make fun of the French for their hopeless infatuation with redistribution, intervention, and other statist policies. So it is rather embarrassing that France (33 percent) currently has a significantly lower corporate tax rate than the United States (about 40 percent, if state taxes are included). Imagine, then, how humiliating it will be if Nicolas Sarkozy wins the French presidency and follows through on his proposal to lower France’s corporate rate to 25 percent. To be sure, the impetus for a lower corporate rate is tax competition rather than a new-found appreciation for market forces. And even Sarkozy’s call for a lower corporate tax rate does not mean he has embraced the foreign concept of “laissez-faire.” As Tax-news.com reports, companies would have to jump through numerous hoops to benefit from the lower tax rate:

In an interview with French business daily La Tribune, Xavier Bertrand, a spokesman for the centre-right presidential candidate, said that Sarkozy wants to lower the rate of France’s corporate tax to 25%, bringing the tax down to about the average rate in the European Union. However, unlike France’s European partners, Sarkozy is keen to link a cut in corporate tax to a series of governance criteria, and companies would have to demonstrate that their employment, wage and investment strategies were “synchronised”. …Sarkozy fears that with key European competitors having recently announced corporate tax cuts, including Germany, Spain and the UK, France risks becoming increasingly unattractive as a place to do business and cannot afford to do nothing. Under plans agreed by Germany’s coalition government, the effective corporate tax burden there will fall to below 30% from almost 40% in January 2008, while the UK’s Chancellor of the Exchequer Gordon Brown announced a 2% cut in corporate tax in his recent budget speech. The old EU15 also continue to face growing tax competition from the new EU entrants in Central and Eastern Europe, such as the Czech Republic, where the government has announced proposals for a 15% flat tax on personal income and a 5% cut in corporate tax to 19%.

IBD Argues Against Back-Door Capital Gains Tax Hike

With the support of some Republicans, revenue-hungry politicians are contemplating a tax hike on the “private equity” industry. These firms help ensure the efficient allocation of capital. And as Investor’s Business Daily explains, part of their reward for successful investing is a share of the capital gain. In an ideal tax system, there is no capital gains tax. Investments, after all, are made with after-tax dollars. It certainly would be a mistake, therefore, to move in the other direction by more than doubling the rate:

With the Sarbanes-Oxley regulatory regime making life miserable for many public companies, a number of troubled firms have innovatively turned to private equity to better their fortunes — or even save themselves. …So why do prominent members of both parties in Congress, and even the Bush administration’s Justice Department, seem poised to declare war on private equity? …It’s not surprising that Democrat Barney Frank, chairman of the House Financial Services Committee, plans hearings on private equity. More alarming, Charles Grassley, ranking Republican on the Senate Finance Committee, is considering joining that panel’s Democratic chairman, Max Baucus of Montana, in pounding the PE industry with a massive tax increase. Private equity firms usually take a 20% profit share, or “carry,” on their complex deals. Under current law, the carry is subject to the 15% long-term capital gains tax. Grassley wants it taxed at the 35% rate for ordinary income. The New York Times has hailed this “Grassley Tax” on jobs and capital as the first step toward a general capital gains tax hike — a surefire means of pulling the rug out from under the vibrant economy. …Congress will get just $5 billion to $7 billion in annual revenues from the Grassley Tax — hardly worth its ruinous economic costs. …Does the senior senator from Iowa, who likes to tout himself as a tax cutter, really want his epitaph to end up being: “Sen. Chuck Grassley, R-France”?

It’s the System, Comrade

In response to my recent Washington Post piece criticizing government-imposed curricula and standards, an ed prof. just wrote to say: “Yes, but….”

His objection was that he did not see the need for market forces to drive excellence in education, citing a consortium of public schools in the Chicago suburbs as an example of high quality within the current monopoly system.

This not only misses my point, it inadvertently proves it.

My point is not that pockets of quality and thrift are impossible within a monopoly system, but that those pockets generally remain isolated and transitory. Monopolies lack a mechanism by which excellence is automatically and routinely encouraged, identified, disseminated and perpetuated. That mechanism is what markets provide, and is why, as I wrote in the WaPo piece, iPods have gone from 5 to 80 gigabytes, and televisions from 4” black and white tubes to 4’ color panels.

While a monopoly school system can certainly have bright spots, they tend to be isolated and transitory. Brilliant government school teachers are at best given a plaque, and at worst driven out of the system (as happened to Jaime Escalante). Pointing to isolated public school successes from decades past – successes that were not replicated elsewhere, not expanded, and usually not even sustained for more than a generation – is proof that our government monopoly lacks the market’s excellence engine.

In education markets, like the Asian tutoring industry, top teachers are superstars who get to design curricula for thousands or even millions of students and train scores or hundreds of other teachers to use their effective methods. Quality providers expand and are emulated by competitors, and there is a powerful incentive for meaningful innovation.

One teacher in Korea’s private tutoring sector made $2 million last year because his web-based employer has profit sharing and he’s brilliant at what he does, so he gets tons of students. That’s what should have happened to Escalante. That’s the sort of success that should greet excellence in education at all levels. It doesn’t because we don’t have a market.

Enemy of the People!

Prof. Walter F. Murphy’s Letter, originally published on Mark Graber’s blog, 3/7/07:

On 1 March 07, I was scheduled to fly on American Airlines to Newark, NJ, to attend an academic conference at Princeton University, designed to focus on my latest scholarly book, Constitutional Democracy, published by Johns Hopkins University Press this past Thanksgiving.

When I tried to use the curb-side check in at the Sunport, I was denied a boarding pass because I was on the Terrorist Watch list. I was instructed to go inside and talk to a clerk. At this point, I should note that I am not only the McCormick Professor of Jurisprudence (emeritus) but also a retired Marine colonel. I fought in the Korean War as a young lieutenant, was wounded, and decorated for heroism. I remained a professional soldier for more than five years and then accepted a commission as a reserve office, serving for an additional 19 years.

I presented my credentials from the Marine Corps to a very polite clerk for American Airlines. One of the two people to whom I talked asked a question and offered a frightening comment: “Have you been in any peace marches? We ban a lot of people from flying because of that.” I explained that I had not so marched but had, in September, 2006, given a lecture at Princeton, televised and put on the Web, highly critical of George Bush for his many violations of the Constitution. “That’ll do it,” the man said.

After carefully examining my credentials, the clerk asked if he could take them to TSA officials. I agreed. He returned about ten minutes later and said I could have a boarding pass, but added: “I must warn you, they’re going to ransack your luggage.” On my return flight, I had no problem with obtaining a boarding pass, but my luggage was “lost.” Airlines do lose a lot of luggage and this “loss” could have been a mere coincidence. In light of previous events, however, I’m a tad skeptical.

I confess to having been furious that any American citizen would be singled out for governmental harassment because he or she criticized any elected official, Democrat or Republican. That harassment is, in and of itself, a flagrant violation not only of the First Amendment but also of our entire scheme of constitutional government. This effort to punish a critic states my lecture’s argument far more eloquently and forcefully than I ever could. Further, that an administration headed by two men who had “had other priorities” than to risk their own lives when their turn to fight for their country came up, should brand as a threat to the United States a person who did not run away but stood up and fought for his country and was wounded in battle, goes beyond the outrageous. Although less lethal, it is of the same evil ilk as punishing Ambassador Joseph Wilson for criticizing Bush’s false claims by “outing” his wife, Valerie Plaime, thereby putting at risk her life as well as the lives of many people with whom she had had contact as an agent of the CIA. …

I have a personal stake here, but so do all Americans who take their political system seriously. Thus I hope you and your colleagues will take some positive action to bring the Administration’s conduct to the attention of a far larger, and more influential, audience than I could hope to reach.